Mariam Samuel and Gareth Minson
The rise in popularity of the radical populist movement and Trump’s win in the election of 2016 proved evident the frustrations of many Americans with the state of the United States economy. Campaigns addressed these frustrations- proposing increased jobs, decreased taxes, and an overall focus on the middle class. The success of these campaigns would lead one to think the economy was in a terrible state, however, statistics show otherwise. At the heat of these frustrations, unemployment was falling and wages were following an upward trend. 2018 data shows wages are 2.5% higher and unemployment is below the natural rate of ~5%. Even more remarkably, it is lower than it has been in the past decade and is forecasted to remain low.
In December of 2017, unemployment numbers in California, Hawaii, and Mississippi were at their lowest since the data was tracked in 1976. Right now, Hawaii leads the nation with the lowest rate of unemployment as it currently rests at 2%. This is an example of the long term trend. Since the election (December 2016 – December 2017), 25 states have posted lower unemployment numbers and only 2 have reported higher. The national rate is only 4.1%. Only 5 states in December of 2017 reported unemployment rates greater than or equal to 5%. As the nation and individual states consistently post better and better numbers and wages rise, even if the rise is incremental, the overall picture is of a very healthy economy.
A healthy economy means that the Fed will continue to bring inflation in check. There are some in the Fed concerned that the low interest rates are the biggest threat to the future health of the economy. The job market trends well, but low interest rates may mean that the “printing money” approach may risk that health. While the consensus is that keeping the projected pace of three rate hikes this year will be enough for the economy’s future, the concern is still there. One possible question for those that just read about the economic collapse of the 70’s: is America on the brink of a similar situation, would it happen under the current administration, and can the new tax plan stave off any danger?
Curdia, Vasco. “FRBSF FedViews: Current Economy and the Outlook.” Economist’s View 16 January 2018. http://economistsview.typepad.com/economistsview/2018/01/frbsf-fedviews-current-economy-and-the-outlook.html
Duy, Timothy, Phd. “Data Lining Up For The Fed’s Rate Hike Forecast.” Tim Duy’s Fed Watch 7 January 2018. https://blogs.uoregon.edu/timduyfedwatch/2018/01/07/data-lining-up-for-the-feds-rate-hike-forecast/
“State Employment and Unemployment Summary”. Bureau of Labor Statistics. 23 January 2018. https://blogs.uoregon.edu/timduyfedwatch/2018/01/07/data-lining-up-for-the-feds-rate-hike-forecast/